RBI Tightens Grip on Financial Product Mis-selling, Issues Draft Directions

• RBI issues draft amendment directions to strengthen regulations on advertising, marketing, and sale of financial products by regulated entities.
• Comprehensive guidelines will cover all banks and NBFCs, including third-party financial products, to curb mis-selling and deceptive practices.
• Key highlight: clear prohibition on "compulsory bundling" and a detailed definition of "mis-selling" to protect customers.
• Banks must refund the entire amount and compensate for losses if mis-selling is established, and obtain explicit consent for all products.
• New norms target digital conduct by prohibiting "dark patterns" and regulating Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs).